Correlation Between SPDR SP and BlackRock Income
Can any of the company-specific risk be diversified away by investing in both SPDR SP and BlackRock Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SPDR SP and BlackRock Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and BlackRock Income Closed, you can compare the effects of market volatilities on SPDR SP and BlackRock Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SPDR SP with a short position of BlackRock Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BlackRock Income.
Diversification Opportunities for SPDR SP and BlackRock Income
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and BlackRock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and BlackRock Income Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Income Closed and SPDR SP is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SPDR SP 500 are associated (or correlated) with BlackRock Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Income Closed has no effect on the direction of SPDR SP i.e., SPDR SP and BlackRock Income go up and down completely randomly.
Pair Corralation between SPDR SP and BlackRock Income
Considering the 90-day investment horizon SPDR SP 500 is expected to generate 1.49 times more return on investment than BlackRock Income. However, SPDR SP is 1.49 times more volatile than BlackRock Income Closed. It trades about 0.16 of its potential returns per unit of risk. BlackRock Income Closed is currently generating about 0.04 per unit of risk. If you would invest 58,083 in SPDR SP 500 on August 27, 2024 and sell it today you would earn a total of 1,670 from holding SPDR SP 500 or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. BlackRock Income Closed
Performance |
| Timeline |
| SPDR SP 500 |
| BlackRock Income Closed |
SPDR SP and BlackRock Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and BlackRock Income
The main advantage of trading using opposite SPDR SP and BlackRock Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, BlackRock Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BlackRock Income will offset losses from the drop in BlackRock Income's long position.| SPDR SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| BlackRock Income vs. MFS Investment Grade | BlackRock Income vs. Invesco High Income | BlackRock Income vs. Eaton Vance National | BlackRock Income vs. Nuveen California Select |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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